Rep. Yun Chang-hyun of the main opposition People Power Party speaks during a briefing held at the office of the ProBit cryptocurrency exchange in the Gangnam district of south Seoul on Wednesday to discuss key tasks related to the registration of exchanges with the government changing the law on reporting and using specified financial transaction information. [YONHAP]

With the September 24 deadline nearing their registration with the government, cryptocurrency exchanges are stepping up efforts to increase transparency in their businesses by hiring compliance experts and working with accounting firms.

Bithumb announced on Wednesday that it has hired Lee You-jeoung as the new Head of Compliance. According to Bithumb, Lee previously led compliance teams in the Seoul office of Goldman Sachs and Nomura Financial Investment Korea.

“Lee is an experienced compliance officer who has built a law-abiding culture in global financial companies for over 20 years,” said a statement from the exchange. “She also has more than 10 years of professional experience in the field of anti-money laundering and customer identification, which makes her the right candidate for us before registering with the [government.]”

Exchanges have until September 24 to register as a virtual asset operator with the Korea Financial Intelligence Unit, the Financial Services Commission (FSC) agency responsible for implementing money laundering practices in Korea, pursuant to an amendment to the Reporting and Use of Act Financial transaction information that went into effect in March.

In order to register, the exchanges have two main tasks. One is to get the Information Security Management System (ISMS) certification from the Korea Internet & Security Agency to ensure that they have achieved a certain level of information security. The second is to work with commercial banks that can issue real-name bank accounts, accounts in the name of the actual cryptocurrency trader, to customers of the exchanges.

Although Bithumb is the second largest cryptocurrency exchange in Korea by trading volume, it has yet to register with the FSC. It has obtained ISMS certification but has not extended its contract with NongHyup Bank, which offers real name accounts to users of the exchange, beyond September 24th.

Banks have been reluctant to partner with exchanges as they may be held responsible for money laundering or other financial crimes on exchanges. The exchanges go to great lengths to demonstrate that they have the ability to prevent money laundering and have a high level of compliance with the country’s legal system.

ProBit announced Tuesday that it has started recruiting for all of its departments, including compliance, engineering and finance, to strengthen anti-money laundering and investor protection skills. The exchange has also received ISMS certification, but has not yet found a bank as a partner.

ProBit said in a statement that it recently split its anti-money laundering team into seven subdivisions to update its internal systems. Earlier this month, the exchange signed a contract with accounting firm Deloitte Anjin to update its anti-money laundering system.

“We already have an internal compliance system in place that is comparable to that of financial institutions, but we are hiring more to improve our systems further,” said Do Hyun-su, CEO of ProBit, in a statement. “We plan to further intensify our anti-money laundering efforts and provide our users with a safe trading environment.”

According to the FSC on Wednesday, Upbit, the country’s largest cryptocurrency exchange by trading volume, is the only exchange to date to have registered with the FSC board, while 21 exchanges received ISMS certification at the end of July.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]